Press Release

Manufacturing Index Reaches All Time High in Q-3 2025-26: FICCI Survey

January 20, 2026

NEW DELHI, 20 January 2026: FICCI's latest manufacturing survey continues to reflect sustained growth and increasing optimism for India's manufacturing sector. For the third quarter of 2025-26, the index has touched all-time high with 91% of respondents reported either higher or same production levels as compared to 87% for Q2 FY 2025-26. This optimism is also evident in domestic demand, as 86% of respondents anticipated higher or same orders in Q3 FY 2026 compared to the previous quarter and more so after the latest GST rate cuts announced.

Source: FICCI survey

FICCI’s latest Quarterly Survey on Manufacturing (QSM), which is the 68^th edition of the survey, assessed the performance and sentiments for Q3 October-December 2025-26 of manufacturers for eight major sectors namely, Auto Components, Capital Goods, Chemicals, Fertilizers & Pharmaceuticals, Electronics & Electricals, Machine Tools, Metal & Metal Products, Textiles, Apparels & Technical Textiles and Miscellaneous. Responses have been drawn from manufacturing units from both large and SME segments with a combined annual turnover of over Rs. 3 lakh crores.

Capacity Addition & Utilization

• The existing average capacity utilization in manufacturing is close to 75%, which reflects sustained economic activity in the sector.
• The future investment outlook is steady for investments and expansions in the next six months.
• Challenges faced by respondents in expanding capacities include global and geopolitical factors (tariffs, trade restrictions, economic uncertainty), operational issues (labour availability, raw material shortages, regulatory challenges).
• The table below gives average capacity utilization for various sub-sectors of manufacturing:

Table: Current Average Capacity Utilization levels as reported in survey (%)

Inventories

• In Q2 2025-26, around 90% of the respondents reported higher or same level of inventory and for Q-3 2025-26, around 83% of the respondents are expecting higher or same level of inventory.

Exports

• In exports, about 69% of respondents reported higher or same level of exports in Q2 FY 2025-26 and in Q3 2025-26 more than 70% of the respondents expect their exports to be higher or same as compared to previous year’s similar quarters.

Hiring

• 38% of the respondents are looking at hiring an additional workforce in the next three months as compared to 35% in the same quarter last year.

Interest Rate

• The average interest rate paid by the manufacturers has been reported to be 8.9%. A little over 87% of respondents reported sufficient availability of funds from banks for working capital or long-term capital.

Sectoral Growth

• Based on expectations, the likely sectoral growth range is shown below:

Table: Growth Expectations for Q-3 FY 2025-26*

* Very Strong >20%; Strong 10-20%; Moderate 5-10%; Low < 5%; Source: FICCI Survey

Production Cost

• Production costs for manufacturers in this quarter seem to remain on higher side. Nearly 57% of respondents reported an increase in the cost of production as a percentage of sales, which is consistent with the previous quarter’s findings, indicating that costs are still on the higher side.
• The increase in cost of production compared to last year is mainly due to higher raw material costs, currency depreciation, and increased logistics, power, and utility costs.

Workforce Availability

• Most sectors though are not facing shortage of labor at factories as around 80% respondents mentioned that they do not have any issues with workforce availability, the remaining 20% feel that there is still lack of skilled workforce available in their sector and there is a need to step up efforts both at government and Industry level.

FICCI Media Division